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With two of the nation’s major transportation modes in the midst of intense labor negotiations right now, companies are monitoring these activities at a time when peak shipping season is in full gear and supply chain shortages continue to plague some market sectors. The West Coast port negotiations kicked into gear over the summer and have yet to come to an end while the rail collective bargaining discussions between U.S. rail carriers and unions representing 125,000 railroad workers are also on the table right now.
West Coast ports manage a high volume of all U.S. imports and exports, and railroads haul roughly 40% of the nation's long-distance freight volume (more than any other mode of transportation). Needless to say, the negotiations are being carefully monitored by organizations and individuals that rely on rail, ocean or both.
“It wouldn't take long for the effects of a rail strike to trickle through the economy. Many businesses only have a few days’ worth of raw materials and space for finished goods,” ABC points out. “Makers of food, fuel, cars and chemicals would all feel the squeeze, as would their customers.” Commuters would also have to find alternate transportation, since passenger railroads run on tracks that are owned by the freight railroads.
West Coast Port Update
In San Francisco, negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) started in May 2022; the two groups’ existing contract expired in early-July. West Coast dockworkers have been working without a contract since that expiration date.
According to The New York Times, nearly three-fourths of the union members work at the ports of Long Beach and Los Angeles, the primary gateways for shipments coming to the U.S. from Asia. Transport Topics says that a dispute over jurisdictional issues between unions at the Port of Seattle has bogged down the talks, and that the National Labor Relations Board is currently reviewing the matter.
“Shipping industry officials had hoped the talks, which began in May, would have concluded around now,” WSJ reports. “Instead, officials say the discussions have stalled for about three months after dockworkers declined to discuss major contract issues pending resolution of the dispute at Seattle.”
The Seattle dispute involves the International Longshore and Warehouse Union and the International Association of Machinists and Aerospace Workers. “The delay illustrates the extent to which disagreements at one facility can derail talks covering more than 22,000 dockworkers at 29 ports along the primary coast for U.S. trade with Asia,” WSJ adds.
In preparation for a possible union dockworker strike, importers and exporters have been shifting some of their ocean freight volume over to East Coast ports. “Ongoing concern about labor and management talks regarding two separate contract negotiations and a slowing US economy resulted in a big drop in container volume at two of the nation’s biggest ports on the Pacific Coast,” Transport Topics reports.
According to the publication, year-over-year cargo numbers were down 25% at the Port of Los Angeles. In October, the port processed 678,429 20-foot-equivalent units compared with 902,643 a year ago. “Industry officials say the East Coast ports continue to gain volume because of the uncertainty over the West Coast labor negotiations,” Transport Topics adds, “including the ongoing freight railroad talks.”
Watching the Rails
Those ongoing railroad talks have also encountered their own set of challenges as some of the involved unions opted to ratify a new contract and others rejected the deal. According to Reuters, U.S. railroads and unions representing 115,000 workers reached a tentative deal in September thanks to government intervention.
More recently, the Washington Post says the union SMART Transportation Division voted the deal down by 50.9% while 53.5% of the Brotherhood of Locomotive Engineers and Trainmen members voted to ratify the proposed deal. These two unions are considered the most “politically powerful” of the 12 rail unions that are involved with the negotiations, the publication reports.
Reuters says that a rail traffic stoppage could freeze almost 30% of U.S. cargo shipments by weight, increase inflation and “cost the American economy as much as $2 billion per day by unleashing a cascade of transport woes affecting US energy, agriculture, manufacturing, healthcare and retail sectors.”
Updated Dec. 1. On Wednesday, the House passed legislation that would thwart a national rail strike and force a tentative rail labor agreement. The House voted 290 to 137 to pass the legislation, which now goes to the Senate for a vote this week.
